Innovative Industrial Properties (NYSE:IIPR), which owns and leases properties to companies involved in the cannabis sector, reported strong first-quarter 2019 results after the market close on Wednesday.
Shares fell 1.3% on Thursday, which we can attribute to general market sentiment, rather than the company’s earnings release. The broader market was down due to escalating trade tensions between China and the United States. The stock has returned a whopping 76.3% in 2019 through Thursday, versus the S&P 500’s 15.3%.
Here’s how the quarter worked out for the company that’s organized as a real estate investment trust (REIT) and its investors…
Innovative Industrial Properties’ results: The raw numbers
| Metric | Q1 2019 | Q1 2018 | Year-Over-Year Change** |
|---|---|---|---|
| Net rental revenue | $6.6 million | $2.7 million | 146% |
| Operating income | $3.4 million | $724,000 | 375% |
| Net income | $3.3 million | $607,000 | 444% |
| Earnings per share (EPS) | $0.33 | $0.09 | 267% |
| Adjusted funds from operations (AFFO)* | $5.3 million | $1.4 million | 275% |
| AFFO per share | $0.54 | $0.23 | 135% |
DATA SOURCE: INNOVATIVE INDUSTRIAL PROPERTIES. *ADJUSTED FUNDS FROM OPERATIONS (AFFO) IS A CLOSELY WATCHED METRIC FOR REITS, AS IT’S THE MAIN DRIVER OF DIVIDEND CHANGES. **PERCENTAGES CALCULATED USING FIGURES FROM FINANCIAL STATEMENTS, NOT THE ABBREVIATED ONES LISTED IN THE TABLE.
IIP’s revenue growth was primarily driven by the acquisition of new properties, along with contractual rental increases at certain properties. Year-over-year revenue growth accelerated from last quarter’s 111% and from full-year 2018’s 128%.
What happened with Innovative Industrial Properties in the quarter?
- It paid a quarterly dividend of $0.45 per share on April 15 to stockholders of record as of March 29, representing an increase of 29% from the previous quarter and 80% year over year. At Thursday’s closing price, shares are yielding 2.11%.
- During the quarter, IIP acquired two properties: a 43,000-square-foot industrial property in California and a property in Ohio with two industrial and greenhouse facilities, which are expected to comprise a total of 58,000 square feet upon completion of development. Both are fully leased via triple-net, long-term leases, with the Ohio property leased to a subsidiary of PharmaCann. (Triple net means that tenants are responsible for paying property taxes, insurance, and maintenance costs.)
- After the quarter ended, through May 7, the company acquired six properties: five industrial properties in southern California totaling about 102,000 square feet and an industrial property in Pennsylvania comprised of 51,000 square feet. Each property is fully leased to a tenant via a triple-net, long-term lease.
Here’s the current snapshot of Innovative Industrial Properties’ business, according to the earnings release…
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